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The Economic Impact of Green Credit: From the Perspective of Industrial Structure and Green Total Factor Productivity

Author

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  • Cai Chen

    (School of Finance, Southwestern University of Finance and Economics, Chengdu 610074, China)

  • Shunbin Zhong

    (School of Business, Minnan Normal University, Zhangzhou 363000, China)

  • Yingli Zhang

    (College of Economics and Management, Shanghai Ocean University, Shanghai 201306, China)

  • Yun Bai

    (Faculty of Social Sciences, University of Southampton, Southampton SO16 7NS, UK)

Abstract

Promoting economic growth while achieving sustainable development is the original purpose of green credit. Based on panel data of 30 Chinese provinces from 2008 to 2020, we systematically evaluate the economic impact of green credit by exploring the influencing factors, regional differences, and underlying mechanisms. The results show that: (1) Green credit is more prevalent in provinces with higher foreign direct investment (FDI), research and development expenditures (R&D), financial development, urbanization rates, and lower government fiscal spending. At the regional level, green credit issuance gradually decreases as the region moves towards the west. (2) From a national perspective, green credit issuance has a significant impact on local economies. Local GDP increases by 0.482% for every 1% increase in green credit. (3) The underlying mechanisms are the rationalization of intra-industry structure and the improvement of green total factor productivity. These findings are robust against alternative measures of economic growth, quantile regression estimation, and the construction of instrumental variables. Finally, we propose policy recommendations for China’s continued implementation of green credit policies.

Suggested Citation

  • Cai Chen & Shunbin Zhong & Yingli Zhang & Yun Bai, 2023. "The Economic Impact of Green Credit: From the Perspective of Industrial Structure and Green Total Factor Productivity," Sustainability, MDPI, vol. 15(2), pages 1-22, January.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:2:p:1224-:d:1029886
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    References listed on IDEAS

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    Cited by:

    1. Guan, Xuemei & Zhao, Fang, 2024. "A regenerative agenda for economic recovery: Nurturing natural resource efficiency to foster environmental, social, and economic well-being," Resources Policy, Elsevier, vol. 91(C).
    2. Xianchun Liao & Jie Wang & Ting Wang & Meicun Li, 2023. "Green Credit Guideline Influencing Enterprises’ Green Transformation in China," Sustainability, MDPI, vol. 15(15), pages 1-22, August.

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